Category Archives: Politics

General Politics

Failure of DMCA and TPP is going to be worse

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It should come as no surprise to many of my readers that I’m not really a big fan of DMCA. I believe that this law hinders innovation in the arts and sciences. I you are interested in a very nuanced and well articulated argument against Copyright, I suggest you download Lawrence Lessig‘s book Code 2.0 – it’s a law book, but it’s free and interesting. However, I have written about this topic before if you’re like a bit of a synopsis.

The DMCA is a law that requires companies to help copyright holders manage and protect their copyrighted material. This results in something called a Take Down Notice, where the company that receives the take down notice must remove the offending material. In many cases the copyright holders are requiring companies like Google to create tools to allow them to automatically search for offending material.

Growing number of Take Down requests

Growing number of Take Down requests accessed 1/5/2014

For a growing company like Twitch.TV which streams live video game broadcasts and services several hundred thousand viewers at once, may cripple them in the future. According to a recent George Mason University study, the DMCA take down notice process has been a complete failure. The law was never intended to function in the manner that it has been.

The take down notice was designed as a stop gap measure and compromise between copyright holders and the new technologists on the web. The DMCA was passed in 1998, most of the internet that we know and love didn’t exist then. It was likely that only a few people had even started using Google when the law was passed, YouTube was nothing more than a pipe dream, Napster and sites like it were the major driving force for this law.

Over the past few years we’ve had several attempts to expand on the DMCA and make matters significantly more restrictive on the Internet. For example we had the SOPA/PIPA, CISPA laws that the internet killed with a blackout. The blackout is an example of what Rebecca MacKinnon argued in her book “Consent of the Networked” where law makers need to look at the interconnectedness of the world and how these laws reach beyond our boarders and impact the broader world.

Unfortunately, these types of laws aren’t dead and DMCA isn’t going away despite what GMU recommends. Currently TPP is working it’s way through the “Fast Track Process” (fast track essentially allows the President to enter into trade agreements powers not authorized by the Constitution) and if it is successful there are copyright provisions that are very damaging for both Copyright Law and Patents. The copyright provisions are stronger than DMCA, similar to SOPA, and would force all signers to follow the rule of the trade agreement over their own established laws, including the US. If you are interested in reading TPP here’s the full agreement for download at Wikileaks.

What can we do to prevent TPP from making our copyright lives worse? Well, it appears there’s limited things we can do. Of course you can contact your representatives, however, Darrel Issa was already refused to see the agreement. However, more interest from the general population can only be a good thing. We’re going to have elections this year in the US, so it’s a good idea to get people thinking about this trade agreement now and stop it before it’s ratified.

Science as Diplomacy, nothing new

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Healthcare is a big deal these days. In the US costs are soaring, arguably Obama’s legacy rests on his controversial law the Affordable Care Act, and Republicans have risked shutting down the government over the law. So, it’s no surprise when it’s in the news for other reasons. According to The American Association for the Advancement of Science (AAAS), the group that publishes the prestigious journal Science, healthcare is now starting to impact diplomacy. Researchers from several different countries are creating novel ways to introduce addicts in both China and the US to the other’s style of medicine. In the US traditional Chinese methods are being experimented within clinics. While in China “western” medicine is being introduced in a very specific manner to address the same issues.

There are several organizations beyond the one I linked to above that deal with cross-cultural issues using either science, engineering, or healthcare. Organizations like Doctor’s Without Boarders work in many different parts of the world to bring care to those in need. These are volunteers that are doing good deeds to bring care to those that otherwise wouldn’t be able to afford it.

A similar organization is Engineer’s Without Boarders, which improves local conditions of a village or community through technology. For example, one of my friends I met Austin (now teaching at Harvard) would regularly visit a community in Mexico to install different solar panel arrays. This allowed them to have clean drinking water, power for mobile devices, cooking, and heating.

All of these activities help develop good will from one country to another. In fact, foreign exchange students that fully engage with their classmates are also great diplomats. I know that while I was abroad in Europe my friends decided that they would want to visit the US because I introduced them to what people in the US could be like rather than what they’d heard on the TV.

Interestingly, science and engineering have been used for diplomatic reasons for a very long time. I find the most interesting to be the period after World War II. Science played a huge part in rebuilding nearly all of western Europe as well as Japan. Why did we do that? Because we felt having Germany and Japan as allies against the Soviet Union was more important than kicking an enemy while they were down.

The German’s had invented the V2 rocket, which the US wanted to use for our own rockets as well as for nobler purposes. To gain the technical competence to build the rockets we decided to recruit as many Germans scientists as possible and bring them to the US. These were Nazi’s and some of them were likely war criminals, however because we needed them for the Cold War we decided to take advantage of them.

The trade wasn’t simply one way though. The US government encouraged companies to open their doors to European companies. This allowed our allies to rebuild their economy. In fact, the US business leaders like Deming to Japan, which eventually enabled Toyota to best the US automakers with techniques they turned down. These interactions dramatically changed how Europe and Japan evolved over the next few decades.

Diplomacy using science isn’t anything new. It was influential through the Marshall Plan after WWII and will continue to influence the rest of the world. It could be argued that our patent system enables the US prescription drug consumer to subsidize all other economies for their prescription drug use. This is an accidental type of diplomacy that is make the lives better for billions around the world.

I hope that in the future we will continue to influence the world through science and technology support. However, it is best if we help develop the technologies with locals rather than handing them a finished product. As the book Shock of the Old argues in many contexts the newest technology isn’t the best, the best technology is what does the job well enough that the people using the technology can understand and keep running.

Healthcare Exchanges offer a way forward

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In my last Healthcare blog I argued that because of the structure of our payment system, the network effects of the providers, and reimbursement rules healthcare isn’t a free market. I believe that the exchanges in the Affordable Care Act aka Obamacare, actually offer a path forward that may take us closer to a freer market for healthcare than anything we currently have.

First I need to say that they are not an immediate silver bullet the exchanges only offer a way forward and do not guarantee any changes in the market. Furthermore, if the exchanges do provide the changes I’d like to see it will take time, several years in fact, for those changes to have a broader impact on the market.

What are the exchanges? They are essentially a market place where a customer can select a type of insurance with a specific network that meets their needs. How is this different than what we have had in the past? Well, typically health insurance has been only offered through your employer and you get what they offer. If you don’t have a full time job, you’re basically out of luck and paying a huge monthly premium. The exchanges level that playing field by increasing the pool of people that will be using those types of insurance and allowing across state competition for health insurance. For example, there’s only one Blue Cross Blue Shield provider across all the exchanges in the US. That’s a pretty big change.

Because there is competition based on meeting the needs of the customers there will be much faster feedback to the “plans” as they are called. If members don’t like a specific offering, they won’t make any money and the next year will be forced to make a different offering to attract more members. Furthermore, there will be switching across the plans as people realize they dislike certain features. I believe this will happen for several years until a “dominate” plan design emerges based on the success of those plans. Healthier members, low turn over, and acceptable level of revenues for the insurers. Expect these metrics to be similar to the mobile industry in the US (ARPU, Churn, etc..).

Because of the relatively fast feedback on the products in the market and the possibility to have at least three offerings on the exchange (Gold, silver, bronze), insurers can experiment with different types of plans and benefits. The most popular one at this point is something called Accountable Care Organization, which is somewhat similar to an HMO, but is supposed to be better (we’ll see). ACOs as they are called will have to keep track of the overall quality and re-admission rates with a goal of continually driving up quality of care and reduce re-admissions. Additionally, these are narrower networks of care than a traditional PPO that most people have become accustom to.

That’s fine, but that doesn’t really help with the fact that it’s a networked economy and that there’s still a huge imbalance of knowledge. Well, here’s where the insurers can changes things up. Instead of focusing on the narrow set of providers in their region, they can look to create a network based upon the specific of the member’s conditions and have those members go to the specialty providers that offer the best care for those conditions. Even if they are out of state or out of the country.

Granted this data is a bit out of date, however it’s likely to be accurate, according to the Innovator’s Prescription (pg 96) there are facilities that have become so specialized in certain conditions (hernia repair) that their cost to treat those conditions is $2,300 while a general hospital costs an average of $7,000 and has a much lower re-admission rate than the general hospital. With this in mind an insurer could use these specialty clinics and even fly their members to receive treatment and still save money.

This would dramatically change the shape of the network for the members of those insurers and improve overall care and results. It would also dramatically change the interaction with providers in the member’s region as well. Some hospitals are already feeling the pain in this such as Seattle’s Children’s Hospital (which is suing over being excluded).

I don’t think being exclusive it the right direction, I think creating a strong partnership with members through health coaching and care management can help drive better results and education between the provider, insurance company, and member.

This will require continual experimentation with the types of networks, the way the insurance companies interact with their members to take it from a confrontational interaction (from the member’s perspective), and how the providers plan to engage with insurers. There needs to be incentives to encourage providers to recommend non-traditional recommendations. Incentives to support healthy living for the members. Only experimentation in all of these areas can inform the insurers how to engage better to dramatically improve the health and reduce the cost of our nation.

Healthcare is not a free market

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From the obvious department, amIright? Yes, but not for the reasons you think. Healthcare cannot and never will be a free market. There are several reasons for this that I will elaborate on here.

Healthcare consists of micro-regulation in the form of the reimbursement structure. This is an artifact of two different systems combining to make things worse. First, because the Federal Government is big and has two different programs one for Federal Employees and one of those in need Medicare/Medicaid (I’m combining them here for simplicity), there’s also the VA, but that has much less influence on healthcare. These two programs set the terms on how the government will reimburse or even pay providers for care provided. These are based on Current Procedure Terminology (CPT Codes) and not based upon your diagnosis. Essentially the government sets a price they are willing to pay for a procedure. As one of the largest market players, this influences all of the other payers (IE insurance companies). Many insurance companies use Medicare payment rates to set their own, which drives down the cost of a procedure to the point, in many cases, where it’s below the cost of the actual care. This drive providers to select more expensive and more procedures in many cases to make up the short fall. This payment model also makes it hard for new procedure methodologies to be adopted as they may not be paid for.

Healthcare is a network economy – nearly all care happens close to home. This is why groups like the ACLU argue that driving more than an hour for an abortion is an unnecessary burden on women. Because of the proximity of the majority of care (10.2 miles) this creates a local network of care based on the original provider a patient sees. When you receive a referral, there are a few different routes this can go, best doctor the the referrer knows, another doctor in the same clinic, or in the same care network (such as UPMC in Pittsburgh or Kaiser Permanente in CA). This drives an incentive to send patients within the network leading to mutual referrals or money staying within that care network even if there are better doctors for that specific patient outside of that care network. In addition to the Doctor’s network there is, of course, your insurer’s network which may be in direct conflict with the professional network that your provider has.

Imbalances of knowledge – in typical free markets there’s an assumption that everyone has the same amount of knowledge. In Healthcare, it is abundantly clear that this isn’t true. Most patients have little to no understanding of their diseases when they are first diagnosed. On the other hand, both their insurer and provider has an extensive knowledge of the disease. This limits how well the patient is able to correctly make decisions about their healthcare. It also pushes reliance to the provider whenever there is a disagreement between insurer and provider. The member can’t effectively participate in those conversations about care. Furthermore, there maybe little penalty to the patient if they fail to follow the prescribed course of care until much later where neither the insurer or provider can enforce a change of behavior to reduce costs for the entire system now through treatment rather than later when there are more complications.

These are but three cases that highlight the lack of free market mechanisms in healthcare. Even in cases where a patient wants to seek the best care it’s typically the patient’s responsibility to pay for it if it’s not with in the insurer’s network. In many cases these clinics can reduce systemic costs through lower point of care and lower likelihood of readmission after care.

Over the course of the next few weeks I will discuss Exchanges and their potential, how healthcare can be made more affordable using process improvement tools and other mechanisms. I plan on writing weekly on healthcare. If you have any topics that interest you please comment and let me know!

Inequality, is the attention going to drive change?

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In the last few weeks there has been a huge amount of focus on inequality. The attention has been riding a bit of roller coaster since the Great Recession started in 2008 when the focus was on Occupy Wallstreet and the inequality because of the action of the bankers. However, Elizabeth Warren began to really shift the conversation away from just inequality to the total system that enables the inequality. In fact, she started to argue that our minimum wage wasn’t keeping up with the rate of productivity of the economic system. As I argued in my piece on Minimum wage there’s not much impact on local jobs comparatively to the theories that minimum wage increases would dramatically increase unemployment.

However, Wal-Mart and McDonald’s brought the conversation back to the fore through the food drive for Wal-Mart employees that couldn’t afford food for Thanksgiving. According to many theories of efficiency to maximize profit Wal-mart must continually drive lower costs through less employees doing more. However, there’s been some negative repercussions to this beyond the extremely low salaries for the majority of employees, it’s also impacted the stocking of shelves which can reduce sales. Wal-Mart’s salaries and behaviors have caught the attention of professors at Harvard, recently there was an HBR Blog post about Wal-mart’s food drive – I strongly suggest reading that article. It provides great perspective about the impact of low salaries. Essentially, if the bulk of Wal-Mart employees work full time at $7.25 per hour they are well below poverty line, which means that these employees would end up getting food stamps. Employees with a family of 4 need to make at least $15/$16 per hour to be above the poverty line. That gap of $7.75 that provides food stamps and medicare for these employees. The author is arguing that these government benefits aren’t purely entitlements for minimum wage workers, but also entitlements for the companies as well.

Of course HBR isn’t the only place arguing that inequality is a serious problem. Paul Krugman, the Pope, and the recent article in the Guardian (that I wrote about in Taking the Long View) are as well. Paul Krugman arguing this isn’t exactly surprising, he’s been arguing that inequity and the result of the recession has had massive negative impact on the economy. The long term under employment of workers is continuing to cause damage to our economy.

The real question is will this conversation actually drive any change? Will we see any change in policy? There has been some recent shifts in the republican perspective of the budget. Which may actually relax the demands on cutting unemployment and other “entitlements.”  Studies have shown that every dollar spent on unemployment adds about $1.64 into the economy. So this is something that will likely have a positive impact on the economy, if we do some different thinking about what we’re spending money on. That being said, I’m very skeptical that in our current state of politics that we’ll see any serious change in how to treat economic inequity in terms of changes in tax policy which can reduce inequality.

I think that at this point it would require a serious popular swing in opinion to drive the change through the elections. In most states that are negatively impacted by inequality, this is an unlikely occurrence as they are republican strongholds.

What can we do about inequality? Well, if you’re an employer work to make sure you pay fair wages. As a consumer we can make choices to buy products at locations that provider higher wages and access to benefits – we can also chose to boycott companies that do not pay a living wage. As I explained in my article about health costs, proper healthcare reduces quality of life and reduces inequality. As a employee of a company that pays low wages, you can work to ensure all employees that work for you receive a living wage through salary increases or other support. This won’t drive systemic changes though and if we want those we’ll have to work through contact our political leaders to drive change. Without these choices we will not see changes and will continue to have inequality. This inequality will likely only get worse over the next several years.